close on bloomberg markets. ♪ a lot is weighing on investors as president trump's decides to post tariffs on steel and aluminum that is coming from the eu, canada, and mexico. those exempt will expire at midnight tonight. we are getting retaliatory action. we have breaking news on u.s. crude oil inventories. of 3.6 million barrels, the market is looking for a gain. gasoline inventories also surprising. we're looking for a drawdown of 950,000 and we got a bill of half a million barrels for gasoline inventories. looking for a drawdown and we got a small bill.

two point 1%. the market was looking for about 7% there. a loss of refinery use it. let's get the market reaction. it is a fascinating one. wti crude trading at $57.69. 30 minutes until the end of the session. it is all about trump, taimur hyat --tariffs, and equities. will be forthcoming for mexico, canada, and the eu. germany's dax down by 1.5%. it exports the most steel to the united states. the euro stoxx 50 down by 1.4%. you get a flavor of what is happening. the euro was much higher before the announcement. it has drifted down.

11672, still up for the second consecutive day. bond yields falling across the curve. let's have a look at some of the other stories. loads of politics. according to the broadcaster in -- in that's in spain spain, the socialists have enough votes to oust -- the move in the bond market. yields come down and the spread between germany and spain widens. below the level we reached earlier this week. keep an eye on that. tomorrow to my british consumers feeling more up the about the spending prospect. -- upbeat about the spending prospect. we have this index of confidence increasing by two point. declaring themselves more optimistic about personal finances. that is what that charts tells us. astsche bank is in the news

a u.s. business was put on the list of problem banks added to a group of troubled lenders monitor by the company's deposit insurance lender. that is according to unofficial. shares down 7.5%. the lowest level for deutsche bank on record. 90 minutes into the session. another look at oil prices just after we got the inventory report. we have a leg up in oil on that unexpected drawdown. oil is still lower on the day. there are a lot of headwinds, most notably the idea that opec and russia may be easing their production in the second half of the year. oil is still below $68 a barrel. we are seeing energy stocks improve. let's look at stocks more broadly. we see what is no longer a mixed picture. the nasdaq was higher earlier and now it is lower. the dow is at the low of the

session on these terrorist concerns. concerns. we continue to see outperformance in the world for 2000 -- russell 2000. it was rallying and was at a record once again. if you look at the bloomberg we had the relative performance of small-cap overlarge cap. this is a chart we have brought up frequently. the russell had a big outperformance after the election in 2016. it has been steadily climbing versus the s&p 500 once again. looking at some of the movers. i want to check on steel stocks. they continue to hang on to gains. although they have moderated to some degree. tariffs,k about steel aluminum tariffs, and whether there will be retaliation, a lot of that is priced into the stocks and steel prices themselves. if you look at hot rolled steel come at the prices, look at this chart.

it is incredible. you have prices climbing which would already be a benefit to many of those steel and aluminum companies. julie, thank you. finance ministers and central bankers are gathering in canada. this as global reaction is coming in after the trump administration said it will now impose tariffs on steel and aluminum imports from the european union, canada, and mexico beginning at midnight tonight. we are joined by michael mckee, our international politics and finance correspondent. live in canada. as anticipated, the countries that are affected are ready to go with retaliation. what changed in the last couple of hours? >> we are starting to get some of the retaliatory action. it was goingcing

to impose sanctions on u.s. products including some steel made in the u.s.. legs,ausages, lamb apples, grapes, cranberries, and some cheeses. no specific threats of retaliation from canada in terms of what it would retaliate on. they have indicated they would. the eu and japan with a joint statement after their trade ministers met with robert white heiser, the u.s. trade representative in paris. they both call the u.s. administration's action a threat to the global economy. neither one put forward specific retaliatory tariffs. the eu had threatened u.s. bluejeans, whiskey, and ryan's homein paul district of milwaukee. we are respecting retaliation. no comment from the u.s. treasury secretary, but he is always a going to have a lot to answer for to the other ministers today.

mark: given that europe would not open a dialogue with the , what a dialogue on trade be forthcoming? you think this would close a door to an open dialogue between the u.s. and europe. it depends on how you define the door. in the united states they are continually ready to talk to the eu or any other affected countries. that itas reiterated will not negotiate unless it gets a permanent exemption to the steel and aluminum tariffs. there is a standoff over whether they will continue to talk. the other question is what happens to nafta negotiations. canadians suggest that there might be tariffs imposed today and they are willing to continue at the table. we don't have word from the mexicans on whether they will continue to talk. wilbur ross told

reporters the u.s. doesn't think enough progress has been made on nafta. there doesn't seem to be a timetable for concluding the treaty. they thought it was time to impose the sanctions and put pressure on those two countries. whether it helps moves towards the goal is an open question. vonnie: michael, we are going to be updating everyone on the story throughout the day. our thanks to you. trade tensions weighing on risk appetite. the name is taimur hyat the chief strategy officer. you say investors need to be increasingly cognizant of the geopolitical facts of impacting the process. how does today's news play into that theme? >> today proves the case stronger than ever. we are seeing this remarkable shift from everything being about central banks and quantitative easing, to geopolitical risk and the actions of politicians in

the fiscal and trade it -- trade space. i think the u.s. has left enough a run flexibility that this is the first step of many and we should wait to see where it goes. there is still a chance that the bark is worse than the bite. --k: is nafta does this change that view? >> we are not trading against nafta. some new form of nafta we think will be formed. this will add to political volatility. we think that nafta agreement may be delayed because of a series of political change is coming our way. we have elections in mexico, it will be until september that we have the next person in command. we have an election next year in canada, how will that change the picture? and we have the midterms in the

u.s.. we think a new nafta will be formed but it will be delayed and there is lots of uncertainty and volatility in markets until we get there. imur, let's talk about everything that is weighing on the markets. if you take a look at the major currencies and how they are performing, the mexican peso is the worst performer down 1.4%. we are seeing positive reaction to the one -- some latin american currencies are not doing too that. how can you call the end of sovereignty come on a day like today where we are talking about italy, new competence in spain, where we are talking about irish stationed officers looking for theretion again in case is an irish border and brexit is not going anywhere. how do you see the end of sovereignty in that environment? >> our point of view is the end

of sovereignty for investors is are weakerereigns and their control of the economy is being buffeted by global sources. what you are seeing is a reaction. a reaction to that global trend. it tends to try to wrest back control within a more nativist and nationalist world. i think we did say that there would be a lot of volatility as that battle between globalization and nationalism plays out. within the emerging market context i would say what we are seeing is something else which is important. greater em fact divergence. in southeast asia and china they own -- very different from what is happening in mexico and latin america. when trump got elected you did see an effect on the mexican currency. there was a bit of a bounceback. there is so much integration between mexico, canada, and the u.s..

a car manufactured in north america travels eight times across the borders before it gets fully manufactured. those supply chains will win but there will be lots of noise. we see this as noise in a long-term perspective. vonnie: our institutions in the western world, in liberal democracies, are they still better at handling things like financial crises then emerging economies like china, which is managing it from within, from the state level? we saw italy fall off a cliff two days ago and suddenly we are fine again. we are not talking with a 200 or 300 basis point move we saw on monday and tuesday. is that the ecb or european institutions? >> i think italy is an interesting example of where emerging markets were forced to

perform during the crises in the 90's and 80. italy has never had reform. since the financial crisis, they had a punto worth -- period where they grew less than germany in terms of per capita income. you are seeing these lack of performance leading to the nationalist movements in developed countries in western markets. i think that geopolitical risk that is arising, that politicians are generating in markets, is converting them to emerging markets. there will still be geopolitical risk, but you are seeing a divergence. you can no longer ignore geopolitical risk in developed markets. mark: good to see you. taimur hyat chief strategy officer at pgim. >> president trump says that meetings on the summit between

north korean officials have gone well. the president tweeted that the north korean delegation is expected to deliver him a letter from kim tomorrow. secretary of state mike pompeo is leading the u.s. team. in spain, the state television reports that the prime minister is one step closer to being ousted. the socialist opposition is said to have enough votes to defeat him in a no-confidence motion tomorrow. could trigger elections if the quick before lawmakers vote on the measure. more problems for deutsche bank. the german lenders business was put on a u.s. list of problem banks. deutsche bank has been added to a group of troubled banks monitored i the federal -- monitored by the fdic. supporting the federal reserve's plan for gradual interest hike. taking a look at consumer

spending, it rose in april by the most in five months. it was up .6%. the fed's prefer on inflation gauge how the central bank's target. it rose 2% from a year ago. global news more than 24 hours -- global news 24 hours a day. this is bloomberg. vonnie: lots more ahead on bloomberg. next come the latest on the political turmoil in spain. conservatives say the party will back a note confidence motion -- no-confidence motion that could spell the end of rajoy's leadership. at the top of the hour we will be talking the trade, budgets, and daca. later on we have a nice was an interview with federal bank president jim bullard. this is bloomberg. ♪

♪ vonnie: live from new york i am vonnie quinn. mark: live from london i am mark barton. let's get to italy. bonds rising for a second day. the company's -- we just learned the italian economist, a leading candidate for the role of finance minister, for more on the ground we go to anne-marie. could the populists get their act together and for to government or not? >> that is what they are potentially trying to do right now. maillot --and the

they are in a meeting in the lower house of parliament. they areust learned as meeting is that on the short list it seems like the economist giovanni is up for the job of finance minister. he is currently holding a course on economy of corruption and illegal markets. he is a professor in rome at a university. that is all we know about him. we do not have the finance minister, this economy job is crucial. this is what set things up on sunday when the president vetoed their pick up the finance minister. he callurosceptic the euro a german cage. it is crucial for them to move government forward. if they are unable to get a deal done we could possibly see in the next few days, carlo being sworn in. this has been a government or a minimal time and has minimal

scope. we would see fresh elections in autumn. >> perfectly sum it up. annmarie hordern in rome. vonnie: just over the way, we spainllowing reports in where socialist lawmakers now have the vote to oust prime minister mari on a rough boy -- mari oano rajoy. he could trigger election to the quits before the elections. it is a case of the more extreme parties having this massive impact on the political situation in spain. now we might have another leader ousted. bring us up to speed. this is at sure populist revolt in light with what we're seeing in italy. the socialist are a mainstream party. they do have catalan separatists

in their coalition. their pick for the government has been pretty moderate, pretty centrist. they have agreed to follow rajoy's budget plans this year. i would not expect any major backlash in spain. mark: talk us through the scenario. willis socialist gain power or resignn away -- rajoy and force an election? >> that is the big question. basquehind me is the national leader of parliament speaking. whether hisnfirming party is actually going to vote against rajoy . hase does that then rajoy until tomorrow morning to decide what to do. he is having pressure to quit and roll the dice with the

elections. we are getting a lot of conflicting reports on what he will do. been sales, bloomberg european government reporter and editor in madrid. trade tensions tightening, the eu striking back against president trump's tariffs on steel and aluminum. -- think you for joining us. can you put into perspective what this move, with the impact of it is on german industry, on german steel and aluminum makers? >> we are worried about the decision of the u.s. administration. it brings burden to steel and aluminum producers in germany and europe and elsewhere. it also brings the burden of the

demand of steel and aluminum. this is mainly german car producers producing in the u.s., and locations in the usa, and therefore for them this is an increase in expenditures. at the end of the day that usags disadvantages to the and also to the consumers. mark: is this just the beginning of a spat between the eu and the u.s.? we know the trump administration is looking into levying tariffs on automaker. germany is a massive auto industry. if that was to happen, in what direction are we heading? >> we do not hope that we are n even stronger straight dispute -- trade dispute.

have a lot to lose. it is not only the impose month -- imposing of have a lot to lo. tariffs, it was the reagan imposing of sanctions against iran. an extraterritorial effect with german companies winding down business with iran and russia. that is not the start. it is another step in the trade conflict. don't see say that we this in accordance with wto rules. there will be a dispute settlement case at the wto. hopefully there will be a good reaction in the u.s. to see that that is not the way we want to go. vonnie: we can always hope.

in the meantime, are you issuing recommendations to your members? to take action when it comes to moving production facilities, or to not take action and wait and be patient? >> we have to inform our members. millionny we have 3.6 member companies and a network of worldwide german bilateral chambers in the u.s.. they have to change their business case. be more worried than we are at the moment. foresee that there could be in the global value chains of german producers not in favor of u.s. locations. we have a lot to inform, but

a reaction, as positive reaction that we can come back to the trade agreements or negotiations about free trade agreements with the u.s.. vonnie: we will continue the models here. our thanks for your time today. that is the deputy ceo for the german chambers of industry and commerce. mark: we are three minutes away from the end of the thursday session. it has been dominated by the trump decision to let iteris on onorts -- levy tariffs aluminum and steel imports. this is bloomberg. ♪

>> from bloomberg's european headquarters in london i'm mark barton. stocks falling way down by trump's decision to waive a way to waiver when it comes to

aluminum and steel tariffs. those tariffs will come into effect earlier than anticipated. a flight to safety in the wake of that decision by commerce secretary wilbur ross. there is the wonderful wn germany among the big exporters of steel to the united states. that is the situation when it comes to trade. this is the situation when it comes to inflation. we had inflation in the eurozone rising at the fastest pace. ecb's2%, which is the target. two weeks until their next decision. there is a lot in play given that italy is bubbling under the political crisis. and 1.9% raise is good for the ecb -- ecb. inflation, lifted

the core rate rose to 1.5%. that is the inflation rate. this is italy germany, the yield differential. coming up a bit today. a bit lower on the news of tariffs being lifted. 2.4%, below the levels we saw the other day. a drop of 50 basis points a few days ago. the yield blew out to the widest it has been. best it has been in years-- ubs asset management skeptical. i want to talk to you about the euro. it has come down in the wake of the trump caret decision. it is down by a 10th --tariffs decision. it is down by a 10th of a percent. worth month since november 2016, down by 3.2% because of

the data which is slow down lost momentum and the political situation in italy and spain. i want to tell you about deutsche bank, shares have followed to a record low. 7% is the decline today. stoxx 600 bank index performer this year. it is the worst stoxx 600 bank index performer in the last months since the u.s. business with what on -- since the bank was put on a list of troubled lenders monitored by the fdic. still revealing news which is not pleasant to the ears of those on the shares. vonnie: it is all about trade for the moment in the u.s.. a stronger dollar thanks primarily to other currencies which are we getting. the mexican peso is above 20. the strength has been receiving momentum -- certainly not thanks

to those trade headlines today. the tenure yield is at 2.84%, that is eight basis points -- the 10 year yield is at 2.84%. which is the right level? we be asking that question throughout the day. the spread is back to 41 basis point. after those inventories, crude at 6736 -- 67. -- 67.36. crude had been rising again following that freefall last week. lessig a quick look at vmm. the canadian dollar is weaker as well. even though, we were more or less anticipating this. it does not mean we can foresee what is going to happen tomorrow or the day after. the turkish lira as well. down 1.5%.

steel, 2.2% higher. we know u.s. steelmakers took a jumped after the news this morning. 3%y are back down to two or at east even though it is a down market. mark: the u.s. is worried about deutsche bank's u.s. business according to a source familiar with the fdic. they put them on a list of banks was serious weaknesses. shares tumbling today hitting an all-time low. --oomberg's yen a yummy a finance manager. -- there were concerns about capital strength, the potential burden of u.s. fines. the news goes from bad to worse. >> it does seem to be a similar pattern to what we saw in september of 2016.

they are on track for a closing record low. not an all-time record low. today's news reminds investors of the difficulty of expanding in the u.s.. that is a market they are retreating from. clearly being on those lists, which means special attention from u.s. regulators, does not make your business dealings in that country easier. controls, monitoring, capabilities, are the real concerns about control, risk, process? >> yes that has been an ongoing feature. we reported a couple months ago about a very large transfer that had happened. seemingly missing all these controls that should be in place to prevent $35 million of funds moving from one account to another. that is the type of instant we are talking about which has people concern. vonnie: i just want to have a look at the short interest rat.

the white line is the short interest ratio. this is back at the end of march. around 6%. indicator of any kind of threat of short-sellers having more of an impact? >> absolutely. in the last weeks, the newsroom italy which is also created tension for financials in europe. circumstances of divergent, one tends to sell the companies that are high up in the risk scale. deutsche bank, given that it is in the midst of a deep overhaul -- the redhead is coming across the bloomberg as if by magic. autsche bank dropping to possible record we could speak

for half an hour -- record. we could speak for half an hour about deutsche bank. yesterday the ceo spoke and he still likes the u.s. business. we were led to believe we are getting out of the u.s., but it would the u.s. -- clearly the u.s. is important. >> it is an important and they have to continue to be there is a a. if you what to be a global scale in certain parts of investment banking. we will know more about what the final -- clearly he is on a race to show that he can get this plan done, that he can execute on it. the previous management, one of the biggest criticisms was they had a plan and the execution failed. mark: shareholders had their doubts. vonnie: it is pretty amazing with shares --

let's check in on the first word news. >> the trump administration has taken its most aggressive's that yet-- aggressive step against u.s. trading partners. ony have imposed tariffs steel and aluminum from the european union, canada, and mexico. it is set to see retaliation from america's closest row was. wilbur ross as he looks forward to more negotiations. president trump said he did not fire james comey over the russia investigation. the mainstream media love to push that narrative but they know it is not true." that contradict what he told nbc news in an interview last year. another sign of a tight labor market in the u.s.. first time filing for unemployment fell last week. --less claims drop by 31 13,000. the government comes up with a monthly jobs report tomorrow.

a new study says facebook is losing its poll with american teenagers. three years ago it was the dominant social network 14. 71% visited the site. according to the pew research center only 51% of american teens use facebook. among sides that are more popular, youtube, snapchat, and instagram, which is owned by facebook. i am courtney donohoe and this is bloomberg. vonnie: keeping a close eye on markets. averagejones industrial is down .6%. the s&p 500 is down .2%. the nasdaq which seems to be volatile is up a quarter of 1%. stores, dollar tree and dollar general are having the worst a in the s&p 500 followed by micron. this is bloomberg. ♪

♪ vonnie: live from new york i am vonnie quinn. mark: this is bloomberg, european close. turmoil on the forefront of market concerns. uncertainty gripping rome and madrid. we just learned of the populist party of italy -- it seems as if they are considering this economist, giovanni, to be a leading candidate for finance minister. of contention to be pushed into another position. is this a good thing?

it clears uncertainty for the time being. >> imf am not sure if it is a great thing or good thing. we have some direction as to what may happen next. until veryknow recently whether we would have an election. if we have an election, when will it take place for it we have a sense -- place. we have a sense of direction and that will help people assess the benefit of having this government in place. will obviously, spending be a big concern. apparent in the next month or so if this government comes into play. we can move to phase two which is to have a clear picture as to what the program actually is. the interaction will be quick with an eu and italy, and the new italian government in terms of reforms they may want to tackle, spending, they said they would like to -- vonnie: more broadly, what

happens next with the ecb? headline inflation today, having seen it at 2% in a couple of other countries in the past couple of days. will the ecb make a move or talk about exiting in july? >> i think the market has already given up on the ecb in terms of seeing any sort of announcement. of all the volatility we have in the market and uncertainty we have -- we were mention only -- with these tariff threats it is difficult to see in the short-term whether the ecb is in a good place to make an announcement. with any delay or give some guidance -- whether they need to delay or give some guidance. the good news for the market is, nobody expects them to do anything until at least the fourth quarter.

the question is whether we will hear anything about it in july. any hints of it happening in the fourth quarter. what about the european equity market? is it fairly valued, is it pricing in these risks? it is definitely pricing some of the risk. we have seen the market pull back a bit. if you look at the european indices, we have experienced a pullback if you -- pullback a few points. overall we have removed a bit of this opportunism we have seen between the trough in late march and a peak a few weeks ago. it depends what the scenario is going forward. if we are thinking about having a full-blown cooperation between the italian government and the

european union, the market is definitely not pressing that type of risk. what the market is pricing is this uncertainty. that is why it is good to have some clarity. perspective, -- --m a valuation perspective the euro is strong and that bodes well for the future. in the meantime we are electing to see some consolidation. mark: germany said u.s. tariffs have no basis. u.s.'s refusalhe to give lasting exemptions. how big a risk is that in your mind? >> that is definitely a risk. if we look at what happened in , these are more of a negotiating tactic than anything else.

we have to see if this is the case or if he means business great if we have retaliation, where does that stop? it has had an impact in the first quarter already. the remorse and the threat of tariffs have had an impact on business sentiment. we would like to see that being resolved. the longer it stays, the more uncertainty we had. it will be difficult for markets. mark: thank you for joining us. , european equity strategist at jpmorgan. vonnie: up next on next was of -- withw an exclusive the canadian billionaire. find out why they are investing more and local companies. this is bloomberg. ♪

♪

mark: live from london i am mark barton. vonnie: this is the european close on bloomberg markets. canadian investment giant fairfax and plans -- plans to invest into a container ship operator. that increases the total investment to $1 billion. the fairfax ceo prem watts the and david sokol spoke with us exclusively. family that ison a very large shareholder, the controlling shareholder. we would like to back them. >> david's track record is outstanding. time per the 20 your called met company american and the revenues went from something like $100 million

plus 211 billion. 11 billion. the most important statistic is the return on equity. on average they have 23% over that 20 year period. not many business and i have seen with results like that. >> david, i hope your ears are burning. in terms of the vote of confidence, you just closed a acquisition, -- and -- transactionthe gci which was a $1.6 billion one. our ability is highly enhanced by fairfax's initial investment. having fairfax with this $500 million investment coupled with the washington family's and

norma's investment, we have two of the best foundational investors you can have in an infrastructure like this. ,ot unlike mid-american energy this is an infrastructure business. a lot of people look at it and think the returns are not good, but the reality is if you invest at the right time, if you grow assets properly, if you buy them in the right instances and run them well, the opportunities are significant to create real long-term cash flow and shareholder value. we could not be happier with what fairfax is doing. our key shareholders are going to make a next 10 years fun. >> there has been a bear market in this industry for a long time. seaspan ran into balance sheet issues. this was a turnaround when you came to it, is the turnaround over? >> yes. last year we had to focus on

cash flow, pay down as much at as we could -- debt as we could because the company had over leverage itself. we got that done and we demonstrated to credit and rating agencies, and our seriousers that we are about running the business the right way for the long haul. we did have to change at senior management of the company but that is complete now. really solid team focused on what is essential in business, attention to detail and execution. making real differences every day. our new cfo is doing a great job. the whole team is gathered around the momentum that gets created when everybody realizes we are all in it for the same purpose. in terms of what true you to this company, there were many to choose from if you are looking for a value and business that was struggling.

thatwas it about seaspan attracted you and make you want to invest $500 million? >> as i mentioned earlier, the key reason is we are very management oriented. david i have known for at least six years and prior to that i followed him at mid-american. his track record is outstanding. taking a company with 100 million in revenue to $11 billion and at the same time having a 23% return on equity on average over 20 years is one of the best track records. to --e had an opportunity when david called us and said, there is a possibility here sometime in december, we jumped on it. a sign of a good partnership is that, i don't think it took more

than five or 10 minutes to get the deal done. in terms of negotiation i am thinking. more recently, we came up with the idea that this is a terrific platform for david. if he converted the warrants into equity, 500 million, and keep the thought of billion, one billion dollars, one of the biggest investments we have had, that david as a management team for seaspan would be in a tremendous position to consolidate the industry. watsa and david sokol with amanda lang. mark: the big news in italy. it seems as if the five-star movement, the leak has a great on a government team. what is important is italian

economist giovanni tria is being touted as the finance minister which would remove concerns about savon who has had an anti-euro stock slant. vonnie: this potential new finance minister saying people who called for unconditionally leaving the euro as a cure for all else are right but neither is the eu president mario draghi when he said the eu is irreversible. the euro is trading at 116. 77 -- 116.77. mark: we will continue to focus on all those stories here on bloomberg television. ♪ retail.

under pressure like never before. and it's connected technology that's moving companies forward fast. e-commerce. real time inventory. virtual changing rooms. that's why retailers rely on comcast business to deliver consistent network speed across multiple locations. every corporate office, warehouse and store

near or far covered. leaving every competitor, threat and challenge outmaneuvered. comcast business outmaneuver. >> it is noon in washington, 5:00 and london. i'm david westin. shery: and i'm shery ahn. welcome to bloomberg balance of power. david: here are the top stories

we are watching. from talk to action, president trump will impose tariffs on imports from europe, canada, and mexico at midnight tonight. litigation to reciprocal tariffs. inflation in consumption numbers continued growth, while european inflation surprises the upside while we wait for u.s. job numbers coming tomorrow. and is the president right on china? a new book proposes that president xi is seeking global leadership even as he restricts global capital and goods. david: countdown to midnight. wilbur ross announced the united states w